Profit Sourcery

By Si Martin

The benefits of using Fulfilment by Amazon (FBA)

Worldwide there are around two million third party sellers on Amazon. These sellers range from huge well-known brands right down to individual hobby sellers. With so much competition out there you need ensure you maintain a competitive edge. But how?

The traditional way to stand out from the crowd would be to build up customer feedback and earn a reputation as a trusted brand, but this can take a very long time. Using the Fulfilment by Amazon (FBA) service you can gain an advantage over other merchant sellers from the very start and build up sales and feedback a lot more rapidly.

FBA allows you to store your stock at Amazon’s warehouse for a fee. When you make a sale the warehouse staff will package and ship your orders to customers for you and handle any customer service issues.

Save space, time and money

The most obvious benefit to using FBA is the space and time you can save, if you want to build up a range of stock lines. If you have an unused spare room or garage you might be able to store products at home or you could hire a space but as your business grows this can become impractical and costly. Amazon has eight warehouses all over the UK which you have access to. This means you don’t need to worry about whether you have space to store something, you can just go ahead and buy.

Even if you do have a large storage space at your disposal, as your stock lines grow so will your sales. This means you will increasingly need to spend more time packing and shipping out customer orders. With Amazon’s strict guidelines on late dispatches you need to make sure everything is shipped out on time. This can easily become unmanageable and unless you hire somebody to help you out (which might prove expensive) you will end up with bad metrics, putting your entire business at risk. As part of the FBA service Amazon will package and ship every order on your behalf. For many people, starting their own business is a means to having more time to spend with their loved ones or to do the things they love doing, FBA will allow you to spend time the way you want to whilst still making sales.

Take the Stress out of Packing

Allowing Amazon to deal with the shipping of your orders means you don’t need to buy packaging materials. It’s important that customers receive well packaged orders to ensure their products don’t arrive damaged. This means if you are shipping orders yourself you need to buy good quality packaging, letting Amazon take care of this for means you can be sure your products will arrive in great condition and saves you money and stress.

No need to handle your own customer services

As part of the FBA service, Amazon will handle your customer enquiries and complaints for you. Some of you might enjoy interacting with your customers but for many of us the thought of handling a complaint, especially if it seems unjustified, is a nightmare. Amazon are pros when it comes to customer services and you can be sure they will do whatever it takes to make sure your customers are happy.

It is possible that customers will occasionally contact you directly but if you redirect them to Amazon in a polite way, explaining that you use FBA and all complaints etc. must be handled through Amazon directly, most people will be happy to take their issue to Amazon. In some cases the customer will not understand the FBA service and you will need to handle the situation yourself if possible. If it is something you cannot handle you can always contact Seller Support for assistance and let the customer know you are looking into it for them.

Win the Buy Box from day one

If you’ve read our blog “Getting started with the Buy Box” you will know how important the buy box is to Amazon sellers. In order to win the buy box you need to prove to Amazon that you’re a trustworthy seller who will ship products on time, in the condition advertised and you are able to provide the very best customer service. It can take some time to build up this sort of credibility on the Amazon marketplace as a new seller. Using FBA allows you to skip ahead; having Amazon take care of your dispatch and customer service means they can be sure you will be providing the very best!

If you use FBA you can win the buy box from day one which means you can make more sales from the word go. This in turn allows you to build up good metrics and positive customer feedback to keep growing. Estimates suggest that 90% of sales on Amazon go through the buy box, increasing your chance of winning the buy box potentially means a 90% increase in sales.

Appeal to Amazon’s most loyal customers and increase your margins

Amazon Prime customers are the most loyal on Amazon with higher spending habits. In the USA Prime customers spend an average $1,500 which is more than double the average of $625 spent by non-Prime shoppers. By using FBA you make your products Prime eligible; this means Prime customers can order your products with free next day delivery. This makes the big spenders more likely to buy from you than another seller, even if you charge a little more. You could offer free or low cost next day delivery yourself if you want to but this would mean accounting for that cost in your selling price and would put pressure on you to deliver as promised. Through FBA, Prime delivery comes at no cost to you.

So long as your products cost over £20 they will be eligible for Amazon’s free super saver delivery. This means you can price your product a little higher than the competition to match their total price (product price plus shipping). Customers love free shipping and having this on your listings makes them instantly more attractive.

Switch to multi-channel with ease – sell on EBay with FBA

You may decide that you want to sell on EBay or another channel as well as Amazon. Through FBA you can fulfil your orders through other sites directly from the Amazon warehouse. This means you can keep all your stock in one place. If you make a sale through EBay you simply create a fulfilment request through your Seller Central page, put in the customer address and order number and Amazon will ship to them for you. This automatically adjusts your inventory on Amazon. If you decide to go through with multi-channel selling you do need to be careful not to oversell a product. If you only have one item in stock and you list it on more than one marketplace there is a risk of it selling twice and you will have to let one of your customers down.

As a new seller you might be put off by the additional costs associated with FBA but in reality you might find that the benefits far outweigh the costs. Let us know how it’s made a difference to your Amazon business on Facebook and Twitter.